I hear about subsidies for health insurance within the new exchanges coming in 2014. How does that work?

Basically, anyone (or household) whose income is up to 400% of the poverty level will receive a subsidy for health insurance premiums through an exchange. In addition, the lowest income levels (up to 250% of the poverty level) will also receive a subsidy for out of pocket costs.

Four hundred percent of the poverty level for a family of four in 2012 is $92,200.

Subsidies are in the form of tax credits, but the credit can be used immediately to offset the insurance premiums rather than wait until year-end tax filing.

Here is what healthcare.gov says about this:

You’ll see the amount of tax credit you’re eligible for immediately

You’ll see the amount of tax credit you’re eligible for right after you submit your Marketplace application (coming in October 2013). Once you enroll in a qualified health plan, you can control how much of your tax credit you want to use to help pay your monthly health plan premiums.

The tax credit is sent directly to your insurance company and applied to your premium, so you pay less out of your own pocket.

Eligibility depends on income & family size

The amount of tax credit you’re eligible for depends on how much income your family expects to earn. When enrollment starts in October 2013, it’s important to double-check your application to make sure everything is accurate. If the amount of income you report isn’t accurate, you may not get the right amount of tax credit you’re eligible for, and it could mean you have to pay back money at the end of the year.

Check back in October 2013, when enrollment starts, to fill out an application and see how much advance tax credit you and your family are eligible for.